Saudi Arabia Signs $50B Deal with China
As the saying goes, those who achieve great things do not pay attention to minor details. In the last century, Saudi Arabia, plagued by internal strife and external threats, established relations with the United States through the dollar and oil, with both countries benefiting from each other. Today, however, the relationship between Saudi Arabia and the United States seems to be gradually disintegrating.
Saudi Arabia has reaped many benefits from the United States. Despite the chaos in the Middle East, Saudi Arabia, as a major oil-producing country, has remained unscathed, thanks in no small part to the help of the United States. However, with the ongoing Russia-Ukraine conflict, the relationship between Saudi Arabia and the United States has reached an impasse. First, they publicly warned the United States not to confiscate Russian assets, and there are rumors that they will no longer renew the "Oil Agreement" with the United States.
Now, Saudi Arabia is quietly doing something big again, signing a massive deal worth 50 billion with China's six major banks. Is Saudi Arabia completely abandoning the United States? With the signing of the 50 billion deal between Saudi Arabia and China, the renminbi is once again pushed to a climax. At present, the U.S. stock market is plummeting, the U.S. economy is weak, U.S. debt has exceeded the 35 trillion mark, and the dollar seems to be abandoned by the world. The competition between China and the United States is also facing a reversal.
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Saudi Arabia Signs a 50 Billion Deal with China
The outside world's evaluation of the Saudis is like this: with a piece of cloth on their heads, they are the richest in the world. As the world's largest oil-producing country, every move by Saudi Arabia is also quite generous. At present, the Paris Olympics are in full swing, the highest leader of Hamas was attacked by Israel in Iran, and the situation in the Middle East is turbulent. However, Saudi Arabia, which is in the midst of it, seems unaffected and has quietly signed a cooperation agreement with China's six major banks, valued at 50 billion U.S. dollars.
According to media reports, on the second day of August, Saudi Arabia's largest sovereign wealth fund, PIF, signed six cooperation agreements totaling 50 billion with China's main financial institutions.
According to professional explanations, Saudi Arabia's sovereign wealth fund is one of the largest funds in the world, with investors involved in a wide range of fields and many practical projects.
At this critical moment of the competition between China and the United States, they have signed cooperation agreements worth 50 billion with Chinese financial institutions in one go. Such a move is indeed very rare, and the global financial circle has been excited for a while.Although 500 billion may not seem like a large sum on a global scale, if Saudi Arabia were to pay China in its own currency, the implications would be vastly different, potentially causing some unease among Western countries. It's important to remember that Saudi Arabia and the United States are still nominal allies.
In the last century, Saudi Arabia, with its vast oil resources, lacked the capability to protect them. Taking advantage of this situation, the United States, as the world's leading power, signed the "Oil Agreement" with Saudi Arabia, officially establishing diplomatic relations between the two countries.
However, the United States did not accord Saudi Arabia the respect and treatment it deserved. On the contrary, it used the hegemonic status of the US dollar to restrict Saudi Arabia's legitimate rights at every turn, making the country's path to reform extremely bumpy.
Since the Russia-Ukraine conflict, the United States has become even more aggressive, misusing the hegemonic power of the US dollar to unilaterally obstruct Russia and even forcing the organization known as SWIFT to exclude Russia.
This move immediately drew harsh criticism from a group of oil-producing countries, especially Saudi Arabia, which was quite angered!
It's important to note that both Russia and Saudi Arabia are major energy-producing countries in the world. Saudi Arabia, as one of the largest crude oil exporters, and Russia, as one of the largest producers of oil and natural gas, cooperate with each other, forming a trend of self-sufficiency. In addition to this, Saudi Arabia and Russia also have significant economic cooperation.
Now that the United States has forcibly removed Russia from the SWIFT system, isn't this essentially cutting off the path for trade settlement between Russia and Saudi Arabia? You can understand why Saudi Arabia would be upset.
Saudi Arabia strongly opposes this move, but the United States completely disregards Saudi Arabia, insisting on going down a dark path and even showing some threats and hints to those who oppose.
This has also forced Saudi Arabia to abandon the United States and seek other countries instead.China has thus become one of their cooperative partners.
As our China is one of the top manufacturing powerhouses in the world, not only that, but we are also the largest trade partner in goods for many countries.
More importantly, our China has also taken the initiative to sign so-called "local currency swap agreements" with many other countries, which has gradually increased the share of our yuan in global trade exchanges.
The cooperation agreement reached between Saudi Arabia and our Chinese financial institutions is actually also completed on the basis of this "local currency swap."
The Saudi side is quite optimistic about the future development prospects of our China, and they are particularly looking forward to our China helping them achieve a plan called the "2030 Vision."
As the news of Saudi Arabia and China signing large orders spreads, the United States across the ocean can no longer sit still, after all, the dollar is currently undergoing an unprecedented major change, the dollar is linked to oil, and now Saudi Arabia is going to cooperate with China, how can it not panic?
The dollar hegemony is challenged
At present, as the world's top country, the United States frequently uses dollar interest rate hikes to harvest global assets, but the method that has been tried repeatedly seems to have failed at this stage, with U.S. debt breaking through the 35 trillion mark.
U.S. non-farm data was a big disappointment, Japan raised interest rates, and Saudi Arabia and China signed a 50 billion order using local currency settlement, and the dollar seems to have been abandoned by the world, and the dollar hegemony has been severely challenged.On August 2nd, according to the U.S. Department of Labor, its latest data revealed a worrying fact for the market—only 114,000 non-farm jobs were added in July, and the unemployment rate rose to 4.3%, reaching a historical high since October last year.
This move has brought anxiety to the global financial market, triggering speculation that the U.S. economy may enter a recession. This panic sentiment further pushes the global financial market to be cautious and avoid risks, among which the U.S. dollar was hit particularly hard.
The U.S. dollar not only broke the historical low to 103.12, but also rarely fell below the important psychological threshold of 104.
The weakness of the U.S. dollar has provided an upward impetus for the renminbi.
The 50 billion cooperation between China and Saudi Arabia is undoubtedly a major move for China and Saudi Arabia to promote the internationalization of the renminbi.
As early as 2018, the Saudi government threatened the United States to replace the U.S. dollar with the renminbi, but at that time, China itself had not yet "de-dollarized" and was still heavily dependent on the U.S. dollar, so the United States did not take this threat to heart.
Now that the U.S. dollar is weak and the U.S. stock market has plummeted, with many countries abandoning it, the global "de-dollarization" process is accelerating. At present, Saudi Arabia has signed another 50 billion order with China, and more fatally, China and Saudi Arabia will also settle in their own currencies, which will undoubtedly accelerate the global "de-dollarization" process, and the U.S. dollar hegemony is facing a serious challenge.
After all, Saudi Arabia's oil is linked to the U.S. dollar, which has strengthened the global dependence on the U.S. dollar. Now that Saudi Arabia wants to cooperate with China and strengthen the use of the renminbi, it will inevitably weaken the international status of the U.S. dollar.
The United States will not easily let go of Saudi Arabia, but the United States itself is now in a difficult situation, with a weak domestic economy, being abandoned by many countries abroad, and even more so, the Hamas leader was attacked, and the United States has been embroiled in a storm of giving advice to Israel. It was already in an unreasonable position in the Middle East, and now it may be powerless against Saudi Arabia.
At present, China is committed to achieving long-term stability and security in the Middle East. Its professional attitude in Middle Eastern affairs has been praised and supported by local countries, building a stable platform for Chinese enterprises to invest and develop in the region.China's actions stand in stark contrast to those of the United States, and in the future, China is bound to play a key role in the peace process and construction in the Middle East.
The United States' trump card aimed at manipulating and subverting the situation in the Middle East - the "dollar" - is facing significant challenges. As the saying goes, "Thirty years east of the river, thirty years west of the river," the current predicament of the United States can only be described as reaping what it has sown.
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